How can consultancies scale (without the sky-high costs)?
The cost of scaling is one of the biggest barriers to growth for consultancies. People we speak to are eager to grow their services, but daunted by the huge amount of resource it takes.
Organisations need more contracts to increase revenue, but this requires more consultants, which ultimately eats into profits.
Alternatively, organisations can outsource and invest in new service opportunities, but in such an unpredictable market, these investments can feel very risky.
Cutting costs, or finding ways to scale more cost-effectively, is the logical next step. It both makes scaling through investment more accessible and opens up resource to invest into new opportunities.
We’ll look at a few ways consulting firms are looking to do this:
3 ways to cut costs and support scale1. Simplify and enhance your digital services
Digitisation frees up resource which can be plugged back into your client relationships and services. In this context, we mean more than a website or using multiple platforms to deliver your services – we mean using digital processes to enhance your service offering and delivery. Or, taking it further with the Mindset approach to transform your business into an all-in-one platform.
There are many ways to first implement digital solutions. From automation to creating frameworks for processes to analytics insights – you can mix and match what works for you!
For example, by automating certain low-value tasks or highly manual tasks, your team can buy back time. The following activities and methodologies are a great place to start:
- Survey methodologies
- 360 methodologies
- Data capture and reporting
- Workshops and facilitations
Client engagement can also be automated to some extent or simplified – supporting you by relieving some of the pressure of managing communication, but also enhancing the interactions you do control. In Mindset, instead of having your messages getting lost in cluttered inboxes, you can use direct messages in your own business platform to have a quick and clear conversation.
As another example, you can make things like standard communication repeatable in digital workflows, while keeping the personalised messaging. This saves expensive consultants spending hours or days on tasks that could have been templated. Or, certain elements of your service could go totally digital, like a training or skills course.
It’s a simple equation. With less to do, consultants can take on more clients.
Say you pay your associate consultant £35,000, or $80,000, per year. The more resource they can save from digitisation, the more clients they can manage for the same cost, and the better value you’re getting for your money.
Bear in mind as well that digitisation can actually create inefficiencies and poor customer engagement if done incorrectly. Delivering a service online is great, until either the customer or the providers have to navigate a sea of platforms to achieve basic tasks.
Another way to enhance your digital offering is to consolidate it. Instead of using a handful of disparate solutions – an LMS for knowledge, email for comms, a CRM, spreadsheets for accounting and task tracking, a separate reporting tool (the list goes on) - find a solution like Mindset that helps you integrate these processes together. This both streamlines the work that needs done and improves the customer journey.
Of course, it’s still important to find the perfect balance between digitisation and human connection. There will be a right solution for your business and how you want to work. And there’s the cost of this to think of. The whole point is to save money, so don’t get solutions that don’t fit the bill.
Find your golden ratio – and reap the benefits of being able to scale contracts without mass hiring every time.2. Retain staff and knowledge
This sounds like a side note to growth, but it’s fundamental. Finding and retaining talent has been a longstanding challenge for many businesses, with consulting feeling this pressure after what’s being referred to as ‘The Great Resignation’.
On top of this, even if they do find the right skills, it’s expensive to bring in someone new, especially if you’re hiring for a specialised role, such as data or tech skills. Competition for the best talent is fierce, so it’s not going to be cheap to find the expertise or experience you want. Also, you’re losing valuable billable time on marketing, recruitment, training and onboarding activity.
In fact, it’s quoted that managing resignation can cost between 33-50% of an employee’s annual salary. Not even accounting for the hours spent.
If you have good people, you don’t want to let them go. Although reskilling will also take investment, turnover costs more. Keeping on staff that you and your clients know and trust will ultimately save you spending heaps elsewhere.
On the other side of this argument, clients pay for talent, and having great staff that these customers have a relationship with will benefit your revenue potential.3. Optimise your value offering (even more)
Working from contract to contract is a difficult environment for scaling. Generating recurring income is an ideal way to gain some security.
One way of doing this is to productise.
Much of the work for this will already be done – after all it just draws on your existing services. The key is to find what’s repeatable and can be systemised, and package this up. Part of the idea is to minimise the ‘custom’ elements of your services. We understand that this is a huge part of people’s competitive advantage, however, making every small part of your service bespoke just eats into your time/cost equation.
Instead, we’d recommend getting a solution that supports these custom elements. For example, using analytics insights to enhance personalisation and finding tools to automate these one-to-one interactions.
What this also helps to do is maximise the value of what you’re offering. Not only does it optimise your engagements and provide additional value in the sense of personal relationship building, but it helps retain customers, building a greater customer lifetime value.
The maximising approach is also beneficial for scaling in future – giving you a good foundation based on your existing skills. Tying back into our first point, creating more efficient processes (in terms of cost and operations) just gets you close to that golden ratio.
This obviously requires some upfront investment...but you’ll see the return with time. Also, a centralised solution will be a more cost-effective option than adopting multiple different (and probably disparate) platforms.
Have you explored Mindset?
Mindset helps you scale your knowledge-based business.
Mindset is a centralised digital engagement platform enabling consulting firms to digitise their services, so they can reach a wider audience and scale their offering quickly. Built to be intuitive, you can take your ideas to market faster, all without the need for a developer.
Also, Mindset uses ML / AI to take users on a personalised journey, delivering tailored content and communications based on what they like or interact with. So, you can better engage and retain users, with less resource or investment.
Download the '3 stages to for productising your service with Mindset AI' infographic.